If you keep track of news, Bitcoin digital cryptocurrency is making heads turn with its skyrocketing valuations. Bitcoin valuation has increased 10 times during 2017. Early adopters of bitcoin digital currency have become rich, some filthy rich, though their bitcoin holdings.
Most successful people in the technology space have already had some exposure to Bitcoins. Some top website founders are also amongst people who have invested in bitcoins. Today, bitcoin is gaining more popularity online as world-wide currency. There are a number of investors who believe that this currency offers numerous advantages.
What’s this Bitcoin thing?
Bitcoin is a digital currency based on block-chains, which relies on a complex algorithm to create new bitcoins, handle bitcoin transactions, and authenticate such bitcoin transactions.
According to Wikipedia: Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency – the system works without a central repository or single administrator. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009.
Like any currency such as dollar, pound or Indian rupee, you can use bitcoins for payments and buy merchandise anonymously. When using bitcoins for payments, one simply transfers the amount in bitcoins from her bitcoin wallet to that of the receiver. It’s like sending an email. You simply need the bitcoin wallet address where the money has to be credited. In this process of transfer, there are no middlemen such as banks or exchanges.
The entire process of payments using bitcoins is settled directly between the parties involved, with the transaction being certified, validated and recorded using block-chains, or a chain of transactions records.
As there are no intermediaries, international payments are easy and cheap. Bitcoins are not tied to any country and are not regulated as of now. You can send or receive bitcoins without having to pay any bank fees or credit card fees. So, payment transactions are cheap, or rather free.
Bitcoins are like digital files, which are stored in digital format by owners in applications that are called bitcoin wallets. Such bitcoin wallets can be physical devices, computer application, mobile apps or even online apps.
Though each bitcoin transaction is recorded in a public registry or log (or, block-chain), these records identify owners with numbers – only the wallet IDs of the owners. This number cannot be tracked to any individual’s true identity, which means all bitcoin transactions are anonymous.
As bitcoin allows transactions to remain private, one can buy or sell anything without being easily tracked. This anonymity with bitcoin transactions has made it the currency of choice for sale of drugs or other illicit activities online.
Here are some of the features of bitcoins as a currency:
Lower Risk of Inflation
In general, any currency is regulated by the government of that country. The currency’s real value or purchasing power is tied with the economic and political environment in that country. This often leads to major currency fluctuations. The moment a currency drops down in value, it gets devalued, and you have to pay more to purchase products from international market.
When using Bitcoins, you have infinite options. You don’t have to worry about it being inflated in the world market. With time, more number of people will be able to use this currency.
Low Devaluation (Falling) Risk
Most investors in the market believe that as compared to other currency, Bitcoin has a reduced risk of getting devalued. One main reason is that this is an international currency. It is not restricted to any policies imposed by the government. This means that the currency will never face inflation or devaluation.
Investors prefer using Bitcoins for investment as it offers them with easy transaction. When purchasing or selling Bitcoin from your Bitcoin Wallet you don’t have to wait for days for the transaction to be completed. Another benefit is that at any stage the buyers can easily claim their money from the sellers. The transactions are also cost effective as you may not have to worry about transaction fee. It also offers sellers with ease of recovery from the buyers.
In present time, it is not easy for anyone to carry big amount of money with them. If you have to carry few million dollars with you, it may be risky for anyone. With bitcoins, you don’t have to worry about carrying it with you. It is convenient to carry million dollars bitcoin in a small memory card when travelling. Alternatively, your money can stay stored and accessible all time with online wallets or even cloud storage drives.
Not Possible to be Traced
Bitcoin offers anonymity as it is not easy to be traced by anyone. The moment seller gets his money, it may not be possible for the buyer (s) to trace the person using any source. This also means that government sources can never link your identity with the funds stored as bitcoins.
One can get to identify and track bitcoin users only by their wallet IDs or numbers. If you keep changing your wallet addresses, it can make even such anonymous data difficult to be tracked.
Digital Nature Means Easy to Lose
Though bitcoins are digital and offer great anonymity, it also comes with the risk of easily losing your money. You can lose your money stored as bitcoin in many ways.
- Lose your device (eg: computer, memory card, hard disk) on which bitcoins are stored.
- Bitcoin data of your device becomes corrupt and irretrievable.
- Online wallets come with the risk of the service provider fleeing with your bitcoins.
- You simply forget the location of your bitcoins.
As bitcoins are not stored with any central agency, you end up losing your money if any of the above scenario turns true.
Bitcoin for Investment
With growing popularity of bitcoins, and a surging valuation with every passing day, some people have started buying bitcoins as an investment. Early investors have reaped great returns as the valuation of bitcoins have surged from a few dollars to US $10,850 (as on 2 December 2017).
If you have been investing in online assets such as domains (which is commonly called domaining), or websites in hope of reaping sudden windfall, you can also consider bitcoins as another investment avenue.
How to Invest in Bitcoins?
Even the process of investing in bitcoins is fairly easy. As it is a virtual currency, you need to set up a bitcoin wallet that can hold your bitcoins for you. You can download a bitcoin wallet application on your computer or mobile, and create your wallet ID.
In the online world, you can find many secured e-wallets that are wiling to offer your bitcoins with best security. Make sure that you choose a reliable and trustworthy service provider when using a online bitcoin wallet.
Once you have your bitcoin wallet ready for use, you can buy bitcoins from traders and exchanges. You can also receive bitcoins from other individuals as payments or exchange.
Alternatively, you can mine bitcoins using your own hardware and the bitcoin application. Bitcoin mining is basically completing a certain amount of work by solving a complex algorithm to generate the right code (known as HASH). When you find the right code, you get a pre-determined number of bitcoins as reward. However, mining bitcoins is a complicated task which can require lots of computing power (machines with processing power) and electricity energy to actually find the right bitcoin hash.
Why to Invest in Bitcoins?
Bitcoins valuation have been surging ever since it was created. With growing government regulations of traditional currencies, uncertainty in many economies, and demand for anonymous currency to bypass law, bitcoin can emerge even stronger. Though the currency value fluctuates heavily for bitcoins, it has grown steadily over the long term.
Bitcoin valuation has surged almost 10 times its value during 2017. This drastic growth possibility is one of the biggest reasons to invest in bitcoins. However, bitcoin investment is very speculative in nature. You must make yourself aware about bitcoins and its future before committing your to this highly volatile cryptocurrency.
If you believe in such digital revolution of free universal digital currency , you should invest with the hope of even further rise of the currency in years to come.